Snam S.p.A. (SRG) Earnings Call Transcript

Welcome to the 9M 2026 Results Presentation Conference Call. My name is Gala, and I will be your operator for today's event. Please note this conference is being recorded. [Operator Instructions] I will now hand you over to Francesca Pezzoli, Executive Director, Investor Relations and Sustainability to begin the conference. Please go ahead.

Good afternoon, ladies and gentlemen, and welcome to the presentation of Snam's 9 months 2026 consolidated results, which were approved by the Board earlier today. I am here with Luca Passa, Snam's Chief Financial Sustainability and International Asset Management Officer, who will walk you through the recent market developments and the main industrial and financial milestones achieved during the period. Then he will provide a detailed review of our financial performance. After that, we will have the usual live Q&A session. I lend over to Luca.

Thank you, Francesca, and good afternoon, everybody. I am on Slide 2. The first 9 months of 2026 provide further evidence of our business model resilience and the strategic growth of our infrastructure. We continue to deliver some operational and financial performance remain on track with our investment program and have started executing on our asset rotation strategy. Gas demand is resilient, growing for a third consecutive year. We're on top 1 BCM of exports. The recently published scenarios description documents confirm a broadly stable demand outlook to 2040, while gas prices are volatile amid geopolitical tensions. On the regulatory front, the 2027 WACC to market trigger for the regasification appears above the activation threshold, excluding France. In our view, applying the trigger at this stage will not reflect the evolution in the cost of capital, particularly given the rapid movement in interest rates observed since the summer. However, we are awaiting for the regulator final decision. On October 2026, the regulator published the second consultation document for the 7 regulatory [ video ] for gas transmission. The document provides greater visibility on several key items, notably confirming the current remuneration of work in progress and providing clarity on the incentives on fully depreciated assets. Resolution 284 has fully recognized previous year revenues to the [indiscernible] site that we acquired from Edison in 2024. On the financing side, there were no major development during the third quarter, while the Board of Directors approved the renewal of both our EMTM and ECP programs. We sold a 5% stake in De Nora to an accelerated offering. The transaction also increased the company's free float, which we believe should support its market profile and valuation over time. Following the placement, we remain a reference shareholder with approximately 16% stake and unchanged governance rights. We do not envisage any further market placement of our state or a portion of it over the next 18 to 24 months. The transaction is also consistent with a EUR 2.8 billion asset rotation program embedded in our strategic plan. We continue to work on other opportunities identifying the plan like the biomethane disposal, and we will update the market as appropriate. On results, we delivered sound 9 months 2026 figures with adjusted EBITDA, up 11% year-on-year, driven by organic growth and larger perimeter. When adjusted for the one-off 2024, the fleet update recovery booked in the first quarter of 2025. Adjusted net income at EUR 1.111 billion is up 4% year-on-year, net on the hop-mentioned one-off, thanks to higher EBITDA, partially counterbase by depreciation and financial charges. Investment at approximately EUR 2.3 billion include the acquisition control over royalty. [indiscernible] debt stood at EUR 18.3 billion with cost of debt broadly stable at 2.6%. Moving to key achievements on Slide #3. We have completed Phase 1 of the Adriatic line while Phase II folinate, has reached 44% completion. Overall, execution remains strong across our investment programs with more than 1,200 active construction sites at the end of September. Storage levels reached 90% October 20 and picked a 91% before the start of the withdrawal phase, providing a solid buffer by end of the winter season. LNG continued to play an important role in insurance supply flexibility, accounting for around 32% of total gas imports with 163 cargoes delivered to Italy compared to the 160 last year. Moving to Ravenna CCS. Our project has been confirmed as a project of common interest and project of [indiscernible] interest reinforcing the strategic relevance at European level. On Ravenna CCS, permitting continues to advance following the approval of the Environmental Impact Assessment for the first section of the transport network, while the permitting process for the storage facility is ongoing. The project has also been selected for funding under the EU Innovation funds with a proposed grant of approximately EUR 290 million of which around EUR 160 million for Snam, subject retaliation signal of the grant agreement. We have received final binding offers as part of the competitive process for the disposal of our [indiscernible] assets and are now moving into the finance stages. For the agricultural businesses, today, the Board of Directors authorized us to sign exclusivity agreement with F2i and Femogas. We expect to sign a transaction by year-end with the closing targeted for early next year. Accordingly, these assets have been classified as for sale. For the waste business, we do not consider the office received satisfactory. Therefore, we are taking more time to evaluate the offers and all the potential alternatives in order to maximize their value. We also continue to make progress on sustainability with sustainable finance reaching 90% of the funding, up 5% compared to December 2025. On CO2 emissions, we were awarded the Unit gold standards for the sixth consecutive year, and we expect Scope 1 emissions to at least 35% below 2022 levels. Looking ahead on December 14, we will present an updated version of our transition plan to [indiscernible] webinar, for which we will receive an invitation shortly. The update will incorporate the rate energy scenarios developed jointly by name [indiscernible]. And more importantly, we will confirm our climate ambitions against a more complex and challenging energy factor. Moving to Slide #4. Storage plays a critical role in providing flexibility, meeting seasonal demands and acting as a strategic buffer during periods of market stress. It's important has become even more evident over the past few years and remains particularly relevant in today's uncertain geopolitical environment. The ongoing conflict in Iran and tensions affecting LNG supplies, a complicated the European induction campaign with filling levels below the 5-year average. In Italy, thanks to a proactive approach in cross coordination with institutions and the regulator Snam has held to create the conditions for a timely and efficient storage [indiscernible] ahead of the winter. Storage levels have reached 90% on October 20, 10 days ahead of the deadline. As of today, storage stands out at around 89% of available capacity and the withdrawal season start-up. By comparison, European storage levels remain lower at around 73% below the 5-year average. While high storage levels alone cannot guarantee secure your supply throughout the winter, Italy enters the season from a relatively strong position. The combination of solid storage positions, diversified supply sources and flexible infrastructure makes the Italian gas system rather well positioned even though exposed to the evolution of the European system. Moving now to gas demand on Page #5. In the first 9 months of the year, Italian gas demand amount to 45.4 Bcm, up 2.4% versus the same period of last year, marking the third year of consecutive growth with a very volatile monthly pattern. The growth was supported primarily by power generation. The waves in July and August with temperatures are well above the seasonal averages prolonged and intensify the use of a conditioning, increasing electricity demand both during the day and the evening when [indiscernible] output is low. With hydropower generation remaining below average due to the drought, gas-fired generation helped to meet higher [indiscernible] demand, continuing the balancing role already observed throughout the year. By contrast, consumption decline in the industrial and residential and tertiary sectors. You can find all the figures as well as a deep dive on the role of gas in the power system balancing in the last Polaris publication. Moving to Slide #6. Out of the total investment, around [ 23% ] refers to the OT transaction. Considering only technical investment, around 50% are related to development of the investment, gross to tepid by acquisitions are European economy online and include H2 ready replacement to our full compression station, biomethane connections, H2 and CCS investments and a large part of the biomethane CapEx and energy efficiency, excluding cogeneration. SDG's alignment is calculated only on technical investment, excluding the OT business combination and is 51%, of which the majority goes towards SGD 13 and 9, respectively, climate action and industry innovation and infrastructure. So let's now move to the EBITDA and on Slide #7. Adjusted EBITDA for the period was EUR 2.402 billion, plus 8% compared to 9 months 2025, restated excluding the biomethane agri contribution and plus 11% netting the EUR 52 million the flatter one-off recognized in the first quarter of 2025. The growth is mainly attributable to regulated revenues increased for about EUR 84 million, mainly related to tariff ramp and ARPU-based growth, partially counterbalanced by fast money effects. Perimeter effects are related to Stogit Adriatica growth for EUR 30 million that enter [indiscernible] from March 2025. Ravenna FSRU for EUR 11 million that started operating from May 2025 and OLT for EUR 56 million consolidated from March 2026. Additionally, EUR 27 million recovery of past year's revenues related to San Patito and [indiscernible] storage facility acquired from Edison following the resolution net of their now payable to so as agreed under the terms of the acquisition. And finally, revenues from biomethane connections to our network for about EUR 16 million. The slight increase in regulated costs is mainly attributable to labor costs and new hires. With the Market Solutions business, the EUR 30 million EBITDA contribution increase is mainly driven by energy efficiency due to the energy performance contracts for public administration following the reclassification of the agribusiness as available for sale. As for the full year 2026 guidance, we expect adjusted EBITDA more than EUR 3.1 million, driven by rough growth consolidation and the full year contribution of [indiscernible]. Moving to Slide #8. Our associate portfolio continued to demonstrate its resilience despite the persistent geopolitical uncertainty across global energy markets. Overall, associates contribute for EUR 293 million, probably in line with last year. Let me briefly over to the key developments during the period. Beginning with TAP, the strongest contributor to the portfolio growth, results benefited from an additional 1.2 capacity brought on stream to the expansion project together with continued optimization initiatives. Turning to SeaCorridor, the asset continued to be a strategic role in enhancing Europe security and diversification of gas supplies. Compared with the prior year, earnings reflected higher maintenance costs, depreciation and financing charges. Terega continued to face a less patrol commercial environment, reflecting lower bookings and the Spanish interconnection point following the long-term contracts. Meanwhile, our cost and associates delivered a broadly stable performance compared to the previous year. EMG remains the only investment directly exposed to events in the Middle East, following the temporary disruption experienced earlier in the year, gas flows return to the expected level in April. Looking at our Italian investment, Italgas delivered a higher contribution driven by the integration of wired gas. This positive effect was largely balanced by OLT, which from March 2026 is no longer reported among associates but consolidated line by line. Based on the performance achieved so far and the current expectation for the quarter, we now expect around EUR 370 million contribution from associates portfolio for the full year 2026. Let's now move to the 9 months 2026 net income analysis on Slide #9. Adjusted net income for the period was EUR 1.111 billion around plus 1% compared to 9 months 2025, as stated, excluding biomethane and agri contribution and plus 4% net of the deflator one-off recorded in the first quarter 2025, net of the fiscal effect. The trend is attributable to higher EBITDA, as commented before, high SG&A for EUR 67 million following new assets entered into operation and perimeter effects related to Stogit Adriatica, Ravenna FSRU and the OLT consolidation. Net financial expenses increased due to higher average net debt with an average net cost of debt substantially stable at approximately 2.6%, slightly higher contribution from associates overall for EUR 3 million as a result of higher Italian sources contribution for EUR 5 million counterbalanced by a decrease of 2 million international associates. Higher income taxes, mainly due to the increase in iron rate as expected for this year. As for the full year 2026 guidance, we confirm an adjusted net income above [ EUR 1.45 billion, ] which reflects the EBITDA performance partially counter by [indiscernible] and higher net financial expenses and the IRA tax rate increase. Turning now to the cash flow on Slide 10. Cash flow from operations for the period amounted to around EUR 2.751 billion was the result of EUR 1.906 billion of funds from operation and around EUR 850 million of positive working capital. The change in working capital was mainly driven by about 300 million to tariff guidance. EUR 200 million rising from the disposal of gas volumes acquired in 2022 under the strategic store scheme here marked for the reprice corridor, EUR 150 million related to the temporary effect of [indiscernible] service and EUR 200 million of super bonds is tear decrease. Net investment for the period amounted to EUR 1.630 billion, including the cash out related to transaction, net of cash acquired, and the cash related to the [indiscernible]. Outflows were mainly related to the payment of dividend for EUR 1.011 billion. On top of that, we accounted the impact of the Italgas bond refinancing for EUR 432 million, while items are largely attributable to the OLT debt consolidation resulting in a change in debt of about EUR 819 million. Excluding this impact of around EUR 845 million for extraordinary transaction, net debt is broadly stable versus the closing of 2025. As for the full year 2026, we expect a partial reversal of the working capital movement, mainly driven by the wind of related items and the gas price trends impacting balancing activities along with the reversal of the service effect with an expected change in working capital positive for around EUR 400 million at year end. Moving to Slide 11. Net debt at the end of September stood at approximately EUR 18.3 billion. The average cost of debt remained stable at 2.6%, while the fixed floating mix stood at 69% to 31%. Sustainable Finance reached 90% of committed financing, up 5% versus December 2025. During the first 9 months of 2026, we continue to execute our diversified funding strategy across capital markets by other bank facilities and institutional lending securing approximately EUR 3.3 billion of medium- and long-term funds, combined with the enhancement of our core revolving credit facility, the action will further strengthen our liquidity position and provide ample flexibility to efficiently address future family requirements while maintaining our spread debt maturity profile. Our credit profile remains strong, following rating agency affirmation and positive actions in the first half of the year, confirming the strength for our Snam investment credit profile. As for the full year 2026, we estimate our average net cost of debt increasing at 2.7%, with net financial expenses well below EUR 400 million, and we confirm our net debt guidance at EUR 18.9 billion. Let me close with four key messages on Slide #12. First, the fundamentals of our business remain on. Gas demand continues to structurally growth sustained by the needs of the terminated sector while the storage feeling target was achieved ahead of schedule, leaving Italy well position as we enter the winter season. Second, we continue to execute on our strategy. We are progressing with our investment program, delivering our key infrastructure projects and have started executing our asset reduction program while maintaining a disciplined approach to capital allocation and strong financial structure. Third, our financial performance remains solid, supported by the resilience of our business model. Finally, we're well on track to deliver our 2026 guidance. Overall, the first 9 months reinforce our confidence in the strategic direction we have set is non ability to deliver sustainable growth while strengthening the resilience, flexibility and security of the energy system even in a challenging scene. With that, we are now happy to take your live questions.

[Operator Instructions] The first question comes from the line of James Brand of Deutsche Bank. And we'll take the next question from Arthur [ Sikman ] of Morgan Stanley.

I have two. The first one is on your financial targets for 2026. I was under the impression that you slightly increased the EBITDA target from -- in terms of language from approximately to above the guided level. And I think your comments in the press release also suggest that your cost of debt is maybe a bit more stable than you were initially anticipating? With that in mind, why is the net income guidance remaining stable? And is there any item below the EBITDA line that maybe offset those two small positive developments? And the second question is just on the potential increase in Europe in terms of taxes. It seems that it's considered for several years in a row. I was wondering if there is any hope on your side that this could be reflected in the next regulatory review and it would be basically a pass-through for you?

Thanks. Arthur. You work correctly, when it comes to the guidance for EBITDA, it was approximately now above as well as you correctly, we confirm guidance on net income. The cost of debt has been stable up until now for the first 9 months. But as I just mentioned, the guidance for an average cost of debt at 2.7%, so 0.1% higher, and I also gave guidance around net financial expenses just below EUR 400 million for the full year. So the increase in EBITDA expected at year-end is, let me say, compensated or mitigated by an increase in financial charges, driven by the increase in interest rates that we observed in the latest months, which were not forecasted at the beginning of this year. Regarding the taxation or the suggested IAP increase, yes, it is now still a draft in terms of legislation, it should increase by 3% the [indiscernible] on the additional 2% from 2027 and by only 3% in 2028 and 2029. The impact, you probably recall that we already registered the 2% increase of around EUR 40 million for 2026, which is included in the guidance the additional that is currently a draft is an additional 4% impact in terms of EPS. Now regarding the discussion on potentially being mitigated this into the next regulatory tariff, although the at the moment, not provide to transfer this increase to find a customer now in the tariff. Clearly, it will be something that we'll discuss with the regulator because our business, as you might recall, is a fully regulated business, therefore, for us, an increase in taxation affects marginality.

The next question now comes from the line of James Brand of Deutsche Bank.

Two questions for me. The first is I could -- I was wondering whether you could just clarify the timing on regulation going forward over the next few months. So my understanding is get the WACC proposal very, very shortly in the next couple of weeks. We get a final decision on the business review for you in Q1. And then we get the WACC proposal in the spring. So firstly, just is that your understanding? Or do you understand it differently to that? And secondly, on timing, on regulation, I believe we still haven't had any decisions on the new incentives that you recommended to the regulator in autumn last year. So is there any kind of timing on when you think you might hear about those? And then the second question is I keep on hearing about how data centers are super keen to have access to the gas network potentially because they might be wanting to build their own [ CCDTs ] alongside the data centers. Is that something that you're seeing in Italy? And if it is, do you think that will have any impact on your CapEx plans at all?

Thanks, James. Regarding the timing of regulation. Yes, we expect in the, I would say, coming 2 to 3 weeks because the timing is not correct there. I mean it's not exact the confirmation on the WACC for 2027, according to the trigger, so that will be, again, very shortly in terms of timing. As I mentioned before, at the moment, we see a reduction in WACC for the trigger in transport, which is the main part of our business at 1.3%, excluding France from the CRP calculation. Regarding the seventh regulatory period, as you know, we had the first consultation in May the second consultation in October, which we need to reply by December, the beginning of December. So it is, I would say, correct to expect on that one final resolution by the first quarter of next year. But then into next year, you will have the start of the discussion on the [indiscernible] formula. As you probably recall, the second consultation also addressed one of the point, which is the gearing into the consultation on the [indiscernible] formula that should start into the beginning of next year. So how long the process will last. We don't know yet that probably will be for sure, for the first 6 months of the year, and we'll have probably more clarity just after the summer. And that's on the first one. On the second, when it comes to the incentives. The incentives are something we are discussing with the regulator the probably will be part of the overall regulation starting in 2028. We don't know whether on one that we have requested there could be an acceleration into next year but will be part of the discussion on the overall event regulatory period. As far as Combined cycles to serve data center, what we are -- what we can say there is that clearly, we are observing a growth in gas consumption for [ CCTG ] usage for normal uses as well as for demand from data center that are operating as of today in the country. Clearly, we are able to accumulate any additional request of connection, whether product generators or in particular, the people that will drive the data center sites might decide to have a combined cycle basically together with the installation that will do the computing. Therefore, for us, is a potential incremental growth. We are not seeing demand of connection as of today, but this is something also related to the fact that combined cycle capacity, as you probably know, in Italy, is in excess of current utilization. The load factor is probably in the range of 30% to 40%. So there is still additional capacity that could be served with existing capacity, but we are ready to accommodate any additional connection when the week comes. As we are doing on the biometer, for example, connection that you see are growing quite relevantly in the current numbers.

The next question comes from the line of Javier Suarez of Mediobanca.

Some questions on regulation as well. The first one is on the -- on your statement that the application of the regulatory trigger does not reflect the current rate scenario. If you can elaborate on that statement. But I tend to agree that the observation period was just before was not taking the significant spike on rate that we have seen by the -- during the second half of the year and whether or not that could be considered in your discussion with the regulator on whether or not it triggers to be activated. That would be the first question. Then second question is on the second consultation document on the seventh regulatory period, that represent a certain improvement versus the first proposal. You need to make and your comments before the year end, you can share with us the comments or the part of the second consultation document that should be improved, should still be improved which is our constructive proposal to the regulator from this regulatory document. And the third question is, also on that document, there is a mention on the WACC in the upcoming WACC formula review that as you were pointing out should happen during the first half of 2027. But I think that the state like in principle, career is coherent with European standard, if that interpretation is correct and you think that, that is kind of indicating that the current it should be maintained beyond from the first of January 2028.

Thanks, Javier. Lots of regulation. So for the first one, yes, I made a statement that the potential exercise of the trigger action by the regulator reflecting the formulas of today as well as the average of the variables that gets into the formula does not reflect at the moment, the interest rate environment. Why is that? Because you know that the formula is very much sensitive to the company's premium, which has an effect on the formula much higher than interest rates. However, cost of capital for operators like ourselves is set mainly by interest rates. Therefore, we don't think that the existing formats correctly what is the cost of capital for overtake ourselves. And therefore, the comment that a decrease in work into next year with interest rates, which have grown a lot this year and are expected to grow because you know that both ECB as well as the Fed are on a plan of rising interest rates in the forecoming basically central bank decision clearly do not reflect the cost of capital for someone like ourselves. Regarding the second consultation on the regulatory period, I can comment on the key items. So in terms of work in progress, the authority intends to attain the [indiscernible] remuneration methodology around moving after the cost of debt. We have located, as you might recall, in the first one for this option. Therefore, I think here, we are achieving what we did was appropriate in terms of [indiscernible] for work in progress. On the asset at as well, the authority tends to retain incentive of keeping depreciated assets in operations but making it more selective excluding pipelines with critical asset indicators. We already took this on board in what we are declaring under this incentive in terms of asset delta. Regarding the gearing, which is also part of your third question. It remains usable [indiscernible] and we address as the regulator said that in the broader [indiscernible] should start into next year, However, you comment correctly that the regulator sees correct a gearing or from the best market that have done at 0.5% rather than the proposed 0.6%. Therefore, I think your read is correct. However, for us, it's part of the formula. So it depends on the other variables of the formula. And again, using the current format enabling the mark-to-market of the variables, we should have an increase in terms of the remuneration for transportation for the other business under LNG and as well as storage from the years of 2028 and onwards, even higher than will be applied in our existing business plan. Then finishing on the second regulatory period. You probably recall that on the Ross, the consultation confirms that the application of the Ross framework, but revising the calculation on the capitalization rates, creating basically greater visibility to the forward-looking data rather than backward looking. And basically, it's going to be a 3-year period looking at 1 year backward and to your forward. Therefore, the new capitalization rate will be set mainly from 2028 and 2029. And with the first year as midyear. Therefore, we are satisfied with the second quarter station period. This is part of the overall remuneration lover, clearly, we will have to discuss remuneration into the consultation of the [indiscernible] into next year.

Next question comes from the line of Bartek Kubicki Bernstein.

I hope you can hear me well. I would like to ask our touch based on three aspects following the 3Q numbers. First of all, if we look at the financial costs and just look at correct me if I'm wrong or correct. Your financial costs are flat year-on-year, but you have also increased the level of floating debt. So are you simply increasing the level of floating that is probably cheaper than longer-term bonds to keep the financial costs at Bay and consequently may be slightly increasing the potential volatility of financial costs in the future? Or is there something different why the financial costs are flat at 2.6%. Second of all, just coming back to your disposals. You mentioned Agris already held on sale. And actually there is -- there are binding offers. But what is the end game for the waste business? Is it something you need to dispose of, even with a loss or if there is no enough interest, you may probably keep it still 100%. And maybe if you can clarify what is the book value of the waste business. And then lastly, on the regulator, not asking about specifics of the regulation, but the feeling is that [indiscernible] paper predominantly second a bit less, shows that the regulators may be a little bit -- that's my interpretation. So also correct me if I'm wrong, maybe a little bit more skeptical on gas infrastructure assets and maybe is kind of aligning to alluding to some kind of a stranded asset risk, maybe less CapEx in the future. I mean, how do you feel about this? Is it a correct assumption, a bit more kind of a cautiousness from the regulatory point of view, or you think it is still quite bold supportive for future CapEx in the gas network?

Okay. Thanks, Bartek. So on the first one, you might recall that we choose to go more floating at the beginning of the year. So actually, the choose that [indiscernible] floating was pretty helpful in having a flat cost of debt until the 9 months result. Clearly, we have about EUR 6 billion of futile debt. The recent increase in interest rates might affect our financial expenses a little bit by the end of this year. But I can tell you that it's been more gaining towards the first 9 months than what we're going to lose in the last 3 months of the year. We have a policy of remaining into the 75-25 or 70-30 era when it comes to fixed to floating. Then clearly, this depends also on the duration that we have on interest rates on our financial liabilities as well as on how close we are to the new formula. You know that the formula will change in 2028. Therefore, we have this year, reduced duration and reduce exposure to fixed rate because clearly, we don't know what is going to be a remuneration from 2028 and onwards. And that's on the first question. On the second, the waste business, we want to basically crystallize a better valuation for these assets. We have optionality in the sense that water is asking us is either to go below the 50% equity control of these assets by June next year or to berate the assets on a regulated tariff in a tolling type of framework. Therefore, we are visiting in order to extract most of the value on the table business, which might include also select the disposal because there are not many plans when it comes to the waste business overall. And then finally, in terms of feeling, I think the most relevant answer to you is that between the first and the second consultation document, there's been a clear understanding of our basically remarks to the regulator on the first concentration document. Therefore, the regulator has had a very pragmatic approach in going back to some of the proposals, making, I think the argument that the gas infrastructure network when it comes to exportation is not only important to the system, but is key to the overall energy system in Italy. The fact that we are serving all the combined cycle fleet into Italy that makes an increase in terms of consumption, makes the system recent per se. Therefore, I don't share your view that the regulator might be more skeptical on gas infrastructure than it was in the past. And actually all the support that we are receiving not only from the regulator but also from the ministry when it comes to [indiscernible] which we operate our assets. I think it is evident. Bear in mind what has been done on the storage this year in conjunction with the support of the ministry as well as the regulator. Therefore, I don't think that your feeling is correct in this sense. But clearly, we will take this on board and when we update our business plan at the beginning of this year, you will see how this is reflected in our investment for the forecasting 5 and 10 years up until [ 2035. ]

The next question comes from the line of Marcin Wojtal, Bank of America.